Sample Problem $1$

$$ You are evaluating a project with estimated cash flow next

year of $$1$ million

$$ At a discount rate of $6\%,$ what is the PV of this project if it$$s

expected to last for $1$ year? $5$ years? $10$ years? $25$ years?

Forever? $($Assume the cash flows are the same every year$)$

$$ Now hold the project life at $10$ years. What is the value at a

rate of $0\%?3\%?6\%?9\%?12\%?$